Increases 2015 Financial Guidance
Christopher A. Holden, President and Chief Executive Officer of
AmSurg Corp. (NASDAQ: AMSG), today announced financial results for
the first quarter ended March 31, 2015. The Company’s results for
the quarter included:
- Net revenues of $570.4 million, an
increase of 120% from the first quarter of 2014;
- Net earnings from continuing operations
attributable to AmSurg common shareholders of $18.8 million;
adjusted net earnings of $31.7 million, up 73% from the first
quarter of 2014;
- Net earnings per diluted share from
continuing operations attributable to AmSurg common shareholders of
$0.39; adjusted net earnings per diluted share of $0.62, up 9% on
59% higher diluted shares outstanding; and
- Adjusted EBITDA of $93.8 million, a
104% increase from the first quarter of 2014.
See page 6 for a reconciliation of all GAAP and non-GAAP
financial results.
Mr. Holden commented, “We are pleased to report that AmSurg
produced better than anticipated financial results for the first
quarter of 2015, with both Ambulatory Services same-center revenues
and Physician Services contract organic growth exceeding our
expectations. In addition, we completed four acquisitions during
the first quarter, which included an ambulatory surgery center
(ASC), two radiology groups and an anesthesiology practice that
services one of our ASCs. We also acquired an additional
anesthesiology practice on the first day of the second quarter. As
a result of our first-quarter growth and our pace of acquisitions,
we have increased our financial guidance for 2015.”
Ambulatory Services
Net revenues for Ambulatory Services increased 9% for the first
quarter of 2015, to $283.9 million from $259.6 million for the
first quarter of 2014. Same-center revenue grew 3.6% for
first-quarter 2015 compared with the first quarter last year.
Adjusted EBITDA increased 3% to $47.3 million for the first quarter
of 2015 from $46.0 million for the first quarter of 2014. Adjusted
EBITDA margin was 16.7% for the first quarter this year compared
with 17.7% for the first quarter last year.
Ambulatory Services added two ASCs to its base of operations
during the first quarter and ended the quarter with 248 centers.
One of the centers was acquired, and one center was obtained
through a new joint venture partnership, to which AmSurg also
contributed a center. Ambulatory Services had seven centers under
letter of intent at the end of the first quarter and two centers
under development, one of which is expected to open in 2015.
Physician Services
Net revenues for Physician Services were $286.5 million for the
first quarter of 2015. Adjusted EBITDA was $46.4 million for the
quarter, and adjusted EBITDA margin was 16.2%. As anticipated,
Physician Services experienced the normal seasonal impact of higher
salaries and benefits during the first quarter.
Comparable-quarter revenue growth for Physician Services was
14.2%, of which 5.2% was from same contract revenues, 2.3% from net
new contract revenues and 6.7% from acquisition revenues. Contract
organic growth in net revenues totaled 9.0% for the first quarter
of 2015 reflecting a 6.6% increase in same contract revenues and a
2.4% increase in net new contract revenues. Same contract revenue
growth for the first quarter was comprised of a 3.3% increase in
patient encounters and a 3.3% increase in net revenue per patient
encounter.
During the first quarter, Physician Services completed three
acquisitions, including Ambulatory Anesthesia Care in New Jersey,
which provides services to our ASC in Mountainside, New Jersey.
Physician Services also acquired two radiology groups: Radisphere,
which provides radiology and teleradiology services in 25 states,
and Radiology Associates of Hollywood, which provides radiology
services throughout Broward County, Florida. As previously
announced, on April 1, 2015, Physician Services completed the
acquisition of Halifax Anesthesiology Associates in Daytona Beach,
Florida.
Liquidity
AmSurg had cash and cash equivalents of $116.2 million at the
end of the first quarter and availability of $300.0 million under
its revolving credit facility. Net cash flows from operations, less
distributions to noncontrolling interests and excluding
transaction-related costs, were $53.2 million for the first
quarter. The Company’s ratio of total debt at the end of the first
quarter of 2015 to trailing 12 months EBITDA as calculated under
the Company’s credit agreement was 5.1.
Guidance
AmSurg today has raised its financial and operating guidance for
2015 and established its financial guidance for the second quarter
of the year. The Company’s guidance for adjusted net earnings per
diluted share from continuing operations attributable to common
shareholders (“Adjusted EPS”) excludes transaction and severance
costs related to acquisitions, acquisition-related amortization
expense, gains and losses on deconsolidations and share-based
compensation expense. The Company’s guidance is as follows:
- Revenues in a range of $2.46 billion to
$2.49 billion, up from a range of $2.44 billion to $2.47
billion;
- Same-center revenue increase of 2% to
3% for Ambulatory Services, compared with the prior range of 1% to
3%; contract organic revenue growth of 6% to 8% in Physician
Services, up from a range of 5% to 7%;
- Adjusted EBITDA of $454 million to $460
million, up from a range of $445 million to $451 million;
- Adjusted EPS in a range of $3.31 to
$3.39, up from a range of $3.24 to $3.32; and
- For the second quarter of 2015,
adjusted EPS in a range of $0.81 to $0.84.
The information contained in the preceding paragraphs, including
information regarding the Company’s financial results for future
periods, is forward-looking information. Forward-looking
information involves known and unknown risks and uncertainties as
described below. There can be no assurance that AmSurg will attain
the financial targets set forth in this press release. The
Company’s actual results and performance could differ materially
from those expressed or implied by the forward-looking information
contained in this press release.
Non-GAAP adjusted earnings per share guidance for the second
quarter and full year of 2015 exclude acquisition-related
transaction costs, acquisition-related amortization expense, gains
and losses on future deconsolidation transactions and share-based
compensation expense, net of the tax impact thereon, the exact
amount of which are not currently determinable but may be
significant and may vary significantly from period to period (see
page 6 for a reconciliation of all GAAP and non-GAAP financial
results).
Conference Call
AmSurg Corp. will hold a conference call to discuss this release
Wednesday, May 6, 2015, at 9:00 a.m. Eastern time. Investors will
have the opportunity to listen to the conference call over the
Internet by going to www.amsurg.com and clicking “Investors” at
least 15 minutes early to register, download, and install any
necessary audio software. For those who cannot listen to the live
broadcast, a replay will be available at these sites shortly after
the call and continue for 30 days.
Safe Harbor
This press release contains forward-looking statements. These
statements, which have been included in reliance on the “safe
harbor” provisions of the Private Securities Litigation Reform Act
of 1995, involve risks and uncertainties. Investors are hereby
cautioned that these statements may be affected by important
factors, including, but not limited to, the following risks: we may
face challenges managing our Physician Services Division as a new
business and may not realize anticipated benefits; we may become
subject to investigations by federal and state entities and
unpredictable impacts of the Health Reform Law; we may not be able
to successfully maintain effective internal controls over financial
reporting; we may not be able to implement our business strategy,
manage the growth in our business, and integrate acquired
businesses; our substantial indebtedness and restrictions in our
debt instruments could adversely affect our business or our ability
to implement our growth strategy, or limit our ability to react to
changes in the economy or our industry; we may not generate
sufficient cash to service our indebtedness; regulatory changes may
obligate us to buy out interests of physicians who are minority
owners of our surgery centers; we may not be able to successfully
maintain our information systems and processes, implement new
systems and processes, and maintain the security of those systems
and processes; we may be subject to litigation and investigations
and liability claims for damages and other expenses not covered by
insurance; we may be required to write-off a portion of our
intangible assets; payments from third-party payors, including
government healthcare programs, may decrease or not increase as our
costs increase; there may be adverse developments affecting the
medical practices of our physician partners; we may not be able to
maintain favorable relations with our physician partners; we may
not be able to grow our ambulatory services revenue by increasing
procedure volume while maintaining operating margins and
profitability at our existing surgery centers; we may not be able
to compete for physician partners, managed care contracts, patients
and strategic relationships; adverse weather and other factors
beyond our control may affect our business; we may be adversely
impacted by changes in patient volume and patient mix; several
client relationships generate a significant portion of our
physician services revenues; our physician services contracts may
be cancelled or not renewed or we may not be able to enter into
additional contracts under terms acceptable to us; reimbursement
rates, revenue and profit margin under our fee-for-service
physician services payor contracts may decrease; we may not be able
to timely or accurately bill for services; we may not be able to
enroll our physician services providers in the Medicare and
Medicaid programs on a timely basis; our strategic partnerships
with healthcare providers may not be successful; we may not be able
to successfully recruit and retain physicians, nurses and other
clinical providers; we may not be able to accurately assess the
costs we will incur under new contracts; our margins may be
negatively impacted by cross-selling to existing clients or selling
bundled services to new clients; we may not be able to enforce
non-compete agreements with our physicians and other clinical
employees in some jurisdictions; there may be unfavorable changes
in regulatory, economic and other conditions in the states where we
operate; legislative or regulatory action may make our captive
insurance company arrangement less feasible or otherwise reduce our
profitability; our reserves with respect to our losses covered
under our insurance programs may not be sufficient; and the other
risk factors are described in AmSurg’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2014, as updated by other
filings with the Securities and Exchange Commission. Consequently,
actual results, performance or developments may differ materially
from the forward-looking statements included above. AmSurg
disclaims any intent or obligation to update these forward-looking
statements.
About AmSurg
AmSurg’s Ambulatory Services Division acquires, develops and
operates ambulatory surgery centers in partnership with physicians
throughout the U.S. AmSurg’s Physician Services Division, Sheridan,
provides outsourced physician services in multiple specialties to
hospitals, ASCs and other healthcare facilities throughout the
U.S., primarily in the areas of anesthesiology, children’s
services, emergency medicine and radiology. Through these
businesses as of March 31, 2015, AmSurg owned and operated 248 ASCs
in 34 states and provided physician services to more than 330
healthcare facilities in 27 states, employing more than 2,900
physicians and other healthcare professionals.
AMSURG CORP.
Unaudited Selected Consolidated
Financial and Operating Data
(In thousands, except earnings per
share)
Three Months Ended March 31,
Statement of
Earnings Data:
2015 2014 Revenues $ 638,197 $ 259,561
Provision for uncollectibles (67,752 ) — Net revenue 570,445
259,561 Operating expenses: Salaries and benefits 302,179 82,149
Supply cost 42,584 37,805 Other operating expenses 90,570 54,169
Transaction costs 1,471 — Depreciation and amortization 22,818
8,259 Total operating expenses 459,622 182,382 Gain
(loss) on deconsolidation (223 ) 2,045 Equity in earnings of
unconsolidated affiliates 2,651 764 Operating income
113,251 79,988 Interest expense, net 30,247 6,960
Earnings from continuing operations before income taxes 83,004
73,028 Income tax expense 14,249 12,982 Net earnings
from continuing operations 68,755 60,046 Net earnings from
discontinued operations — 68 Net earnings 68,755
60,114 Less net earnings attributable to noncontrolling interests
47,717 42,919 Net earnings attributable to AmSurg
Corp. shareholders 21,038 17,195 Preferred stock dividends (2,264 )
— Net earnings attributable to AmSurg Corp. common
shareholders $ 18,774 $ 17,195 Amounts
attributable to AmSurg Corp. common shareholders: Earnings from
continuing operations, net of income tax $ 18,774 $ 17,392 Loss
from discontinued operations, net of income tax — (197 ) Net
earnings attributable to AmSurg Corp. common shareholders $ 18,774
$ 17,195 Basic earnings per share attributable to
AmSurg Corp. common shareholders: Net earnings from continuing
operations $ 0.39 $ 0.55 Net loss from discontinued operations —
(0.01 ) Net earnings $ 0.39 $ 0.54 Diluted
earnings per share attributable to AmSurg Corp. common
shareholders: Net earnings from continuing operations $ 0.39 $ 0.54
Net loss from discontinued operations — (0.01 ) Net earnings
$ 0.39 $ 0.54 Weighted average number of shares and
share equivalents outstanding: Basic 47,572 31,716 Diluted 47,905
32,120
AMSURG CORP.
Unaudited Selected Consolidated
Financial and Operating Data, continued
(In thousands, except earnings per
share)
Three Months Ended March 31, 2015
2014 Reconciliation of net earnings to
Adjusted net earnings (1): Net earnings
attributable to AmSurg Corp. shareholders $ 21,038 $ 17,195 Loss
from discontinued operations — 328 Amortization of purchased
intangibles 12,422 — Share-based compensation 3,709 2,458 (Gain)
loss on deconsolidation 223 (2,045 ) Transaction costs 1,471 —
Total pre-tax adjustments 17,825 741 Tax effect 7,130 (375 )
Total adjustments, net 10,695 1,116 Adjusted net earnings $
31,733 $ 18,311 Basic shares outstanding 47,572
31,716 Effect of dilutive securities, options and non-vested shares
3,485 404 Diluted shares outstanding, if converted 51,057
32,120 Adjusted earnings per share $ 0.62 $ 0.57
Reconciliation of net earnings to Adjusted
EBITDA (2): Net earnings attributable to AmSurg
Corp. shareholders $ 21,038 $ 17,195 Loss from discontinued
operations — 197 Interest expense, net 30,247 6,960 Income tax
expense 14,249 12,982 Depreciation and amortization 22,818 8,259
EBITDA 88,352 45,593 Adjustments: Share-based
compensation 3,709 2,458 Transaction costs 1,471 — (Gain) loss on
deconsolidation 223 (2,045 )
Total adjustments 5,403 413
Adjusted EBITDA $ 93,755 $ 46,006
Segment Information: Ambulatory Services Adjusted EBITDA $
47,308 $ 46,006 Physician Services Adjusted EBITDA 46,447 —
Adjusted EBITDA $ 93,755 $ 46,006
Net
Revenue by Segment: Ambulatory Services $ 283,910 $ 259,561
Physician Services 286,535 —
Total net revenue $
570,445 $ 259,561
See footnotes on page 10
AMSURG CORP.
Unaudited Selected Consolidated
Financial and Operating Data, continued
(Dollars in thousands)
Three Months Ended March 31,
Operating Data-
Ambulatory Services:
2015 2014 Procedures performed during
the period at consolidated centers 404,519 384,697 Centers in
operation at end of period (consolidated) 237 233 Centers in
operation at end of period (unconsolidated) 11 4 Average number of
continuing centers in operation (consolidated) 235 234 New centers
added during the period 2 1 Centers discontinued during the period
— 1 Centers under development at end of period 2 1 Centers under
letter of intent at end of period 7 7 Average revenue per
consolidated center $
1,206 $ 1,110 Same center revenues increase (decrease) 3.6 %
(2.0 )% Income tax expense attributable to noncontrolling interests
$ 174 $ 168
Operating
Data-Physician Services:
Three Months EndedMarch 31,
2015
Same contract revenue growth
6.6
%
Net new contract revenue growth
2.4
%
Total contract organic revenue growth
9.0
%
AMSURG CORP.
Unaudited Selected Consolidated
Financial and Operating Data, continued
(In thousands)
March 31, December 31,
Balance Sheet
Data:
2015 2014 Assets Current assets: Cash and cash
equivalents $ 116,156 $ 208,079 Restricted cash and marketable
securities 10,957 10,219 Accounts receivable, net of allowance of
$124,606 and $113,357, respectively 244,002 233,053 Supplies
inventory 20,473 19,974 Prepaid and other current assets 97,361
115,362 Total current assets 488,949 586,687 Property and
equipment, net 183,446 180,448 Investments in unconsolidated
affiliates 79,311 75,475 Goodwill 3,500,668 3,381,149 Intangible
assets, net 1,306,267 1,273,879 Other assets 25,368 25,886 Total
assets $ 5,584,009 $ 5,523,524
Liabilities and Equity
Current liabilities: Current portion of long-term debt $ 18,858 $
18,826 Accounts payable 25,808 29,585 Accrued salaries and benefits
144,607 140,044 Accrued interest 17,857 29,644 Other accrued
liabilities 75,701 67,986 Total current liabilities 282,831 286,085
Long-term debt 2,229,994 2,232,186 Deferred income taxes 648,444
633,480 Other long-term liabilities 92,485 89,443 Commitments and
contingencies Noncontrolling interests – redeemable 183,459 184,099
Equity: Mandatory convertible preferred stock, no par value, 5,000
shares authorized, 1,725 shares issued and outstanding 166,632
166,632 Common stock, no par value, 70,000 shares authorized,
48,413 and 48,113 shares issued and outstanding, respectively
888,748 885,393 Retained earnings 646,296 627,522 Total AmSurg
Corp. equity 1,701,676 1,679,547 Noncontrolling interests –
non-redeemable 445,120 418,684 Total equity 2,146,796 2,098,231
Total liabilities and equity $ 5,584,009 $ 5,523,524
AMSURG CORP.
Unaudited Selected Consolidated
Financial and Operating Data, continued
(In thousands)
Three Months Ended March 31,
Statement of Cash
Flow Data:
2015 2014 Cash flows from operating
activities: Net earnings $ 68,755 $ 60,114 Adjustments to
reconcile net earnings to net cash flows provided by operating
activities: Depreciation and amortization 22,818 8,259 Amortization
of deferred loan costs 2,074 498 Provision for uncollectibles
73,999 5,216 Net loss on sale of long-lived assets — 604 Loss
(gain) on deconsolidation 223 (2,045 ) Share-based compensation
3,709 2,458 Excess tax benefit from share-based compensation (3,317
) (1,727 ) Deferred income taxes 3,334 11,933 Equity in earnings of
unconsolidated affiliates (2,651 ) (764 ) Increases (decreases) in
cash and cash equivalents, net of acquisitions and dispositions:
Accounts receivable (74,214 ) (6,867 ) Supplies inventory (30 )
(245 ) Prepaid and other current assets 13,842 (3,638 ) Accounts
payable (2,526 ) (3,578 ) Accrued expenses and other liabilities
(7,886 ) (606 ) Other, net 697 207 Net cash flows
provided by operating activities 98,827 69,819
Cash flows from
investing activities: Acquisitions and related expenses
(126,578 ) (5,038 ) Acquisition of property and equipment (14,783 )
(7,038 ) Proceeds from sale of interests in surgery centers — 1,111
Other (220 ) (418 ) Net cash flows used in investing activities
(141,581 ) (11,383 )
Cash flows from financing activities:
Proceeds from long-term borrowings 2,227 31,945 Repayment on
long-term borrowings (5,213 ) (50,853 ) Distributions to
noncontrolling interests (47,202 ) (43,194 ) Cash dividends for
preferred shares (2,264 ) — Proceeds from issuance of common stock
upon exercise of stock options 1,746 488 Repurchase of common stock
(3,684 ) (2,857 ) Excess tax benefit from share-based compensation
3,317 1,727 Other 1,904 584 Net cash flows used in
financing activities (49,169 ) (62,160 ) Net decrease in cash and
cash equivalents (91,923 ) (3,724 ) Cash and cash equivalents,
beginning of period 208,079 50,840 Cash and cash
equivalents, end of period $ 116,156 $ 47,116
AMSURG CORP.
Footnotes to Reconciliations of
Non-GAAP Measures to GAAP Measures
(1) We believe the calculation of adjusted net
earnings per diluted share attributable to AmSurg Corp. common
shareholders provides a better measure of our ongoing performance
and provides better comparability to prior periods because it
excludes the gains or loss from deconsolidations, which are
non-cash in nature, transaction costs, including associated debt
extinguishment costs and deferred financing write-off, and
acquisition-related amortization expense (the majority of which
relate to the Sheridan Transaction and which are of a nature and
significance not generally associated with our historical
individual center acquisition activity) and share-based
compensation expense. Adjusted net earnings from continuing
operations per diluted share attributable to AmSurg Corp. common
shareholders should not be considered as a measure of financial
performance under accounting principles generally accepted in the
United States, and the items excluded from it is a significant
component in understanding and assessing financial performance.
Because adjusted net earnings from continuing operations per
diluted share attributable to AmSurg Corp. common shareholders is
not a measurement determined in accordance with accounting
principles generally accepted in the United States and is thus
susceptible to varying calculations, it may not be comparable as
presented to other similarly titled measures of other companies.
For purposes of calculating adjusted earnings per share, we utilize
the if-converted method to determine the number of diluted shares
outstanding. In periods where utilizing the if-converted method is
anti-dilutive, the mandatory convertible preferred stock will not
be included in the calculation of diluted shares outstanding.
(2) We define Adjusted EBITDA of AmSurg as earnings before
interest expense, net, income taxes, depreciation, amortization,
share-based compensation, transaction costs, gain or loss on
deconsolidations and discontinued operations. Adjusted EBITDA
should not be considered a measure of financial performance under
generally accepted accounting principles. Items excluded from
Adjusted EBITDA are significant components in understanding and
assessing financial performance. Adjusted EBITDA is an analytical
indicator used by management and the health care industry to
evaluate company performance, allocate resources and measure
leverage and debt service capacity. Adjusted EBITDA should not be
considered in isolation or as an alternative to net income, cash
flows from operations, investing or financing activities, or other
financial statement data presented in the consolidated financial
statements as indicators of financial performance or liquidity.
Because Adjusted EBITDA is not a measurement determined in
accordance with generally accepted accounting principles and is
thus susceptible to varying calculations, Adjusted EBITDA as
presented may not be comparable to other similarly titled measures
of other companies. Net earnings from continuing operations
attributable to AmSurg Corp. common shareholders is the financial
measure calculated and presented in accordance with generally
accepted accounting principles that is most comparable to Adjusted
EBITDA as defined.
AmSurg Corp.Claire M. Gulmi, 615-665-1283Executive Vice
President and Chief Financial Officer
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